Drug pricing bill clears last hurdle in California Legislature

Despite major opposition from the deep-pocketed pharmaceutical industry, the California Legislature Wednesday sent Gov. Jerry Brown a bill aimed at bringing more accountability and transparency to drug pricing.

The passage of Senate Bill 17, introduced by Sen. Ed Hernandez, D-Azusa, marks a rare defeat for drug makers, who spent millions of dollars to successfully beat back similar legislation and a ballot measure in California last year.

“They hired every lobbyist to kill this bill and that’s what made it so difficult to get it across the finish line,” Hernandez said. “If the governor signs it, I believe this bill will have national implications because California is so big and the transparency and advanced notification will reverberate across the country.

SB 17 requires health plans and insurers to break down and report premium and drug cost information to the state. The new requirements will provide the state with data on the percentage of premiums and increases in premiums that can be attributed to prescription drug costs.

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The measure also calls for drug manufacturers to notify state purchasers, health plans, and health insurers, at least 60 days before increasing the cost of certain drugs with a wholesale acquisition cost of at least $40, if the price hike combined with additional cost increases in the two previous years exceeds 16 percent.

SB 17 is sponsored by Health Access California, a consumer health advocacy group, and major labor unions, the California Labor Federation and UNITE HERE. The Pharmaceutical Research and Manufacturers of America has lobbied heavily against the measure.

On Monday, it initially appeared SB 17 might fail in the Assembly under the recent blitz of lobbying and advertising by PhRMA. After the measure stalled with only 31 votes, ten short of what it needed to pass, Hernandez arrived on the Assembly floor, huddling furtively with colleagues to whip up additional support. SB 17 ultimately advanced on a bipartisan 59-10 vote. The Senate sent it to Brown Wednesday on a 31-8 vote.

Hernandez carried a similar drug transparency measure last year, but pulled the plug after amendments in the Assembly watered it down from its original intent to shed light on why prescription prices go up.

PhRMA killed a ballot measure, Proposition 61, last year that would have barred the state from spending more on a prescription than the lowest price paid by the U.S. Department of Veterans Affairs. Bernie Sanders appeared in television advertisements and rallies last year in Sacramento, San Francisco and Los Angeles to urge voters to pass the measure, which fell short on Election Day.